Here are some financial planning tips that every woman should know about.
Did you know that female labour force participation is declining in India? It has fallen from 26.7% in 2005 to 20.3% in 2021. The wage gap is also pretty significant. On average, women earn only about 65.5% of what their male colleagues earn for doing the same work. This clearly indicates that we are still very far away from reaching gender equality. But as strong independent women, financial independence is just another tool in our arsenal.
Importance Of Financial Planning For Women
Financial planning, very broadly, refers to any activity relating to planning your future finances. These plans can be for your sustenance after retirement. They may also increase your savings which can lead to the downpayment for your very own house.
You can make a simple financial plan. Here’s how it goes: you get your salary at the beginning of the month. Then you pay your rent and all your other dues. After this, you set aside some for savings, and use the rest of the money for your expenses. Groceries, clothes, transport — you have to plan for everything. This budgeting process is a part of financial planning.
What Would You Do After Retirement?
After retirement, you would still need money to pay for groceries, medical bills, transport and other miscellaneous expenditure. But you won’t have a salary to complement the expenses. That is where financial planning comes in. Through financial planning, you can save strategically for your retirement, so that you never have to worry about money.
Tips For Financial Planning
If you don’t know where to start, you can use this list to set you on the right track:
1. Be involved with your finances
Consider this to be the cornerstone of successful financial planning — you have to be involved. It is always a good idea to sit down with a friend or professional to chalk out your plan. Use their expertise to find the easiest way of doing things. But only you can make the best financial plan. You alone will understand what your priorities are, and you alone can set yourself on the right track.
2. Set goals
It is always easier when you are working towards something. So, set goals for yourself based on what kind of a life you want, and set realistic targets for yourself. These targets will change based on the different phases of your life, but be honest with yourself when you calculate the targets.
For example, if you want to settle down when you’re 30 and start a family when you’re 35, plan your finances accordingly. Calculate an approximate amount you’ll require when you start your family, and start saving for that amount.
3. Be stringent to develop a savings habit
It is easy to save randomly. But to develop a habit where you save a fixed amount every month takes discipline. There may be times when you are forced to choose between instant gratification and your saving habit. But you have to stay strong and not stray.
4. Avoid using too much credit.
Credit is a very powerful tool, but it can be very risky. A healthy amount of credit usage is always recommended to create a solid credit history. But don’t use too much credit. You don’t want to end up with huge loans to repay because of bad decisions.
5. Keep adjusting your plan based on your life changes
Your financial plan is never set in stone. If you feel like your chosen path is not working and needs adjustments, edit it to synchronise with your life. You don’t have to stick to something even if you feel like it isn’t for you.
